Morning Coffee: Deutsche Bank’s most legendary trader has a big day coming. Hedge fund manager loses billions but gets another $1.5bn back
“Having this conviction quashed is not simply about correcting the record, it’s about finally having validation that this is an injustice that never should have happened”. Jonathan Mathew spoke eloquently for his fellow former Barclays rates traders yesterday, as their criminal convictions for fixing the LIBOR market ten years ago were quashed.
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It is maybe not quite as complete a vindication as he might have implied while hugging his lawyer – the Serious Fraud Office was keen to remind everyone that the reason for quashing the convictions was that there had been errors in the judge’s guidance ten years ago and that it’s not clear that they might not have been convicted anyway if that mistake had not been made. But be that as it may, the SFO seems to be of the view that it’s water under the bridge, the LIBOR market itself no longer exists and that consequently there’s no point in spending anyone’s time and money relitigating the 2010s. Barclays also decided not to make any comment.
All of which means that – since his case turns on exactly the same point of law – former Deutsche trader Christian Bittar will also soon be celebrating on the courtroom steps this Friday. Bittar was only second to Tom Hayes himself in terms of his prominence in the LIBOR scandal – he famously made nearly EUR2bn in revenue for Deutsche Bank over a five year period, and received a $140m bonus in 2008. Bittar was sentenced to five years after pleading guilty in 2018, and has been appealing his conviction ever since the Supreme Court found that Hayes had been subject to a miscarriage of justice.
The question is, what next? Tom Hayes is currently suing his former employer, UBS, in the Connecticut courts, and the sums of money ($400m) involved are large even for someone like Bittar. The most recent filing in Hayes' case is a long memo from UBS setting out the case that co-operating with law enforcement is protected free speech, but if he’s in the mood for revenge, Bittar might do something similar.
Or he could get back into the market. With a quashed conviction, there’s nothing to stop Christian Bittar from returning to the financial services industry, and not so long ago there were hedge funds competing for his services. Bittar has a slight problem in that his experience as a short term interest futures trader might not be considered relevant given the substantial changes in market structure as a result of the LIBOR debacle. But he was genuinely regarded as a legend on the Deutsche trading desk, and there are plenty of his former colleagues who are still in the market and possibly able to vouch for him.
Alternatively, Bittar might choose to accept the clearing of his name, to be philosophical about the 23 months’ incarceration that he can’t get back, and get on with the rest of his life. After (presumably) opening a bottle of champagne and giving a short statement to the media, Christian Bittar will have a lot to think about this weekend.
Elsewhere, it’s not exactly “easy come, easy go”, but in the world of hedge funds it has to be some consolation while going through a period of bad returns to know that they are not (or at least, not yet) impairing your ability to raise funds. Hamza Lessougeur’s Arini Capital has had a tough time of it this year, with the flagship fund down 16%. But nonetheless, it’s raised $1.5bn in another fund.
This is partly because the fund that’s got the new money is Arini’s credit strategy, a highly concentrated fund which has been closed for years. Although 2026 has been a lousy environment for general credit investment, with situations like Altice and Aston Martin weighing on the market, it seems that investors still have confidence in Lessougeur.
It just goes to underline the wisdom of not always trying to maximise fee income. As well as keeping its size manageable so as not to drag on performance, closing the credit fund creates pent-up demand, and an investor base that will be prepared to subscribe even when others might be looking at the performance numbers and asking questions. Just like in show business, it’s best to leave them wanting more.
Meanwhile …
“I’m hopeful that it slows down and gets delayed … I’m not sure we’ve seen that much of it”. According to David Friedland of Citi, last year’s interruption in the poaching of junior staff by private equity has not continued into a trend. He also admitted that his 23 year-old son’s group chats had lit up this week with the big news about Citi’s graduate program. (Bloomberg)
Jane Dunlevie has been promoted from Chief Operating Officer of the TMT investment banking group at Goldman Sachs to be one of three co-heads with Jung Min and Barry O’Brien. (Finextra)
Stories of big team moves are always fascinating, and Gabriel Boghossian has been unusually open about how he organised his private equity secondaries legal team to go from Stephenson Harwood to A&O Sherman. Among the nuggets of information – they called it “Project Gunner” after their favourite football team, and they didn’t involve any headhunters because they were worried about conflicts of interest. (Financial News)
OpenAI have dropped the solutions to hundreds of previously unsolved mathematics problems on the internet. Mathematicians are worried about what this means for the future of the subject, and whether it will continue to be a good way to demonstrate one’s potential for making loads of money at a quant fund. (WSJ)
Apparently people told Penny Pennington, the CEO of Edward Jones, that leaving a banking career to go into wealth management was “like jumping off a cliff”. (Business Insider)
It’s not really a viable status symbol for a banker (unless they have a very large country house as well), but people are now prepared to pay up to $30,000 for an elite quality sheepdog. (Bloomberg)
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